Here's a quick look at the factors driving petrochemical markets in Asia this week.
In the paraxylene market in Asia, support from downstream purified terephthalic acid can still be expected this week as China's Tongkun Group continues to ramp up production, after starting up its new 2.2 million mt/year PTA plant end-2017.
Huabin Petrochemical has also announced the restart of its 1.4 million mt/year PTA line in Ningbo, scheduled for this week.
PX plant maintenance shutdowns set to start in March would also further support prices, according to some market participants.
In benzene, sellers will concentrate on offering cargoes into China in expectation of US spot demand remaining thin. February CFR China discussions are expected to pick up this week, but prices could be capped by stable domestic prices and high inventory levels.
As for downstream styrene monomer, spot CFR China discussions are expected to remain muted this week, especially for prompt loading cargoes, with the surge in East China inventories last week reversing bullish sentiment that followed CSPC Huizhou's unexpected plant shutdown on December 27.
Stock levels held by traders in East China were reported at 78,900 mt last Friday, up 22,500 mt week on week, boosted by the arrival of deepsea cargoes from the US Gulf Coast. With inventories ample until Lunar New Year and downstream demand not expected to return until end-January, market participants are expecting SM prices to fluctuate in the low to mid-$1,300s/mt CFR China until the next wave of restocking picks up pace.
Uncertainty around the date of implementation of Chinese anti-dumping duties on SM imports has also prompted certain traders to seek cargoes for March arrival from only countries not currently under anti-dumping duty investigations, which has further dampened the liquidity of spot discussions on the market.
Propylene prices soared above a 31-month high at $1,031/mt CFR China last week, amid tighter supply within Northeast Asia. Ongoing turnarounds as well as restocking procurement activities ahead of the Lunar New Year holidays will support firmer prices in the coming days.
On the other hand, butadiene spot activity was thin last week as most end-users had secured their requirements for January before the year-end holidays. A butadiene sell tender was issued by a Southeast Asian producer for a late January cargo, which will be awarded this week. Also, market participants are watching for the restart of a styrene-butadiene rubber plant at Qilu in January, which could put downward pressure on SBR prices.
The Chinese methanol market should continue to be supported this week, given short-term supply-side logistical disruptions at Chinese ports, leading to a widening backwardation structure Friday. In Southeast Asia, prices may see weakness, as the region will be well-supplied in February with all three regional plants having returned from turnarounds in mid- to late December.
Asian MTBE spot market activity is likely to be subdued this week, as narrowing inter-octane gasoline spreads dampen procurement interest for blending. Nonetheless, price support will still continue from firm gasoline and energy markets.
Asian high density polyethylene prices were mostly stable last week as buying interest was low due to the typical beginning of the year lull. Some cargoes were heard to be re-exported from Vietnam back to China due to the high HDPE prices in China, particularly for film, traders said.
In Asian PVC, producers are set to increase their monthly offers for February amid bullish demand in India. The offers, which would be out around mid-January, are expected to be raised by more than $50/mt from January settlement prices.
While market sources said buyers in India would likely accept the price increase amid bullish demand, Chinese buyers on the other hand might be less willing, as PVC demand typically slows down in February due to the Lunar New Year holiday season.
--Desiree Quah, firstname.lastname@example.org
--Edited by Geetha Narayanasamy, email@example.com
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